How I became rich as an IT Contractor

I set my plan out early and so didn’t make the same mistakes as many IT Contractors, who thought a few good years of contracting and they would be out of it never having to work again. When I became an IT Contractor for the first time I asked the advice of some experienced contractors and followed that as well as making up some of my own rules.

I was getting double what I got as a permanent employee.

However, as a permanent employee I was spending 90% of my income and saving 10% of it. As I now had twice as much income that meant that I would now be able to save 11 times as much money as I could before. I allowed myself to increase my spending to all of what was my previous salary instead of 90% but that still meant I could save 10 times what I could before.

I also set up as a Limited Company rather than one of those Contractor Umbrella Companies, as that meant that I would be able to claim a lot more expenses when paying my tax.

I had heard from experienced contractors sad tales of contractors who had upped their spending straight away and then found themselves out of work after their first contract without a safety net. Therefore I resolved that I would invest no money for the first six months I was contracting. As I was spending half of my new income this meant that I could survive 12 months without work in my current lifestyle. I had always intended investing my money but I wanted to wait till the time was right.

I had heard that IT Contractors are most likely to invest in the Stock Market and Property in the middle of a boom with the result when that when the boom ends not only might they be out of work for a while but the assets they hold in shares and property are fast declining too and tey become forced sellers.

Anyone who wants to know what can happen to contractors should read these harrowing tales- itcontractor.com

I decide, therefore, to pick my time to invest in the Stock Market. I would wait till the Stock Market had fallen by 20% from its peak before I started investing. Luckily that happened about a year after I started contracting. Even then I didn’t rush in but decided that I would invest a certain amount each month come rain, hail or plummeting stock markets. I didn’t put it all into the Stock Market so that I could still invest monthly in the Stock Market even if I was out of work.

I decided to buy property as well. I used one of those specialist IT Contractor, mortgages brokers rather than walking into a High Street bank which meant that I could use my gross income as the figure rather than my Director’s salary after expenses and dividends were taken out. I didn’t go over the top and take the full amount that the specialist broker could get me. As, a result of all this, not only was I bringing in money but my money was earning more money for me. After six years of this, with a couple of million in assets and cash, I was now in a position to get out of the business and never work again if I wanted. However, I have decided to work for a further two years just to be on the safe side – then I can do whatever I want with my life whenever I want.